Financials
Stocks: Stocks had a wild short covering rally in reaction to the Fed. meeting. The fact that it was unable to follow through is not a good sign for any bulls. I would characterize Thursdays rally as a â�,��"patriot rallyâ�,� ahead of the holiday and nothing more. Market internals continue to be negative and I again must stress that the COT report on the Dow clearly shows that the â�,��"little guyâ�,� is the only one buying this market up and I think we all know what that normally leads to. I expect to see the stock market to fall most of next week as more and more reports come out. Look for the Dow to fall back below 11,000 in the very near term. Buy or spread puts if you havenâ�,��"�t already.

Bonds: Bonds took the change in verbiage from the Fed as a sign to rally. I remain long from last week and I am now also long the short end of the yield curve via the September eurodollar contract. While I am a short term bull for now that is all it is, short term. I still expect the numbers that come out over the summer to point to a Fed. that will be all but forced to raise one more time before taking a break. So as those reports come out we are likely to see the current rally to stall. Trail stops with the market at 2x the average daily range or tighter. The real news from the Fed is that we are going to have a wild summer trading across the board because they said they will be â�,��"data drivenâ�,� in future policy, which will have traders overreacting to every report all summer long.

Energies
Last week I mentioned that we were approaching trend line resistance in crude oil. We clearly broke out above that trendline and look to be on a new bull run towards the high seventies in the near term. Our market model shows a high probability of a move to about $78 by the middle of July. The move we saw in Unleaded was largely artificial due to contract rolling so look for a rebound higher early this coming week. The real story in my opinion is the Gaza strip. This situation is curiously under reported here in the US so far, but my sources tell me that the situation is likely to get much worse before it gets better. This could be the catalyst that drives crude above the current highs so be warned. We are long crude and natural gas via calls. Look for this summer to be very volatile in energy, even more so than usual.

Metals
Metals really took a cue from the Fed and broke out wildly on Friday. This is likely to get some follow through next week but as usual I must warn against chasing this market. Buy or spread calls on a pullback. We should see a lot of activity in metals now that we are back above the critical $600 level. We still have over $100 to go before reaching new highs so we cannot say we are in an all out bull mode yet but we are projecting a test of those old highs before the year is out. I also think the situation in Gaza contributed a little to Fridayâ�,��"�s rally in Gold and if that situation does get out of control we could be testing the old highs before the end of July!

Grains
Grains staged a rally this week in anticipation of Friday morning crop report. The report did more or less come out as bullish for the price of grains. I prefer the long side of corn or beans over wheat for the near term. Grains have struggled to participate in the overall rally in commodities and with a Dollar that is in serious decline and all the talk about ethanol we feel that a long options trade in corn is more than warranted. Look for grains to follow through after the holiday.

Softs
After breaking out, Oj has settled back into a consolidating bull flag pattern on the daily charts. This should point to continued higher prices so spreading calls is again the best way to approach this thin market. Cocoa did in fact breakout as I mentioned last week and it seems this sleeping bull has woken up. Donâ�,��"�t chase this market either but buying calls on the next dip is the safest way to try and catch this move. If Cocoa can breakout above 1680 then we could see a run back to some old highs above 1900. Coffee also finally bottomed and began rallying. I hope you bought the long call spread I suggested last week as that trade is already doing quite well. Coffee could bounce quite a bit from here so aggressive traders could still get in. Sugar has built a solid bull flag on the daily charts and we are likely to see 17 cents on the October contract before too long. Buy or spread long calls in Sugar. Cotton I guess really did not like me getting long last week because it seemed to sell off like mad about 45 minutes after I got in! Frustrating as that is I remain convinced that longer term this market will wake up and rally.

Meats
Last weeks correction in Hogs did foretell of the pullback we saw this week in cattle. I continue to see this pull back as a pause rather than a trend reversal. Bellies are leading the way higher and we should see an upside breakout there early next week and that should pull the rest of the meat complex out of the current correction.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

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Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.